My PC is definitely strong enough handle the transcoding, I've played different movies about the same quality and it played them without a hitch. Also I checked the processor usage and it's around the 60%.

It's transcoding to mpeg2 for my TV. I set serviio's profile to Sony Bravia TV.

I've also played the movie on my ps3 using another DLNA framework (coherence) which does not do any transcoding. The movie plays without any audio.